4 Must-Have Stocks for a Growth Portfolio

Disenchanted with the poor returns and high fees on mutual funds, some family members recently asked me to help them mold a good growth portfolio.

The working thesis I used for my recommendations was: "Invest first and foremost in companies that demonstrate exceptional levels of innovation, with special emphasis given to those that we believe will be around decades from now."

Yesterday, I offered up the four stocks I recommended as core holdings. Today, I'm telling you about the four stocks I told them were worth investing in, but probably not at levels above 10% of their portfolio. Though these four companies are excellent investments, they don't have the impenetrable moats to keep competitors at bay that yesterday's suggestions had.

Add these four to your watchlist to stay up-to-date on all the latest news, and at the end I'll offer you access to a special free report on a company that founding Fool David Gardner believes could be the next rule-breaking multibagger.

Westport Innovations(Nasdaq: WPRT)This Canadian company is in the business of designing engines for cars, trucks, and locomotives that run solely on natural gas. In order to understand the vast appeal of a fleet that runs on natural gas, take a look at the U.S. Energy Information Association's projections for the price of an equivalent to a gallon of gas over the next 30 years.

lululemon athletica(Nasdaq: LULU)I've been covering this retailer for a while now, and I'm very impressed with the growth strategy management has in place. Appealing primarily to high-end yogis, Lululemon eventually got an in by offering yoga instructors free gear in return for wearing their products while giving classes. That unique approach also includes the practice of offering free yoga sessions at least once per week in their stores throughout the United States.

Recently, analysts were concerned that growth was slowing, but those of us following the company knew it had more to do with the company struggling to keep up with huge demand. With just 165 stores open worldwide as of last October, there's still a lot of room for growth.

I already own shares and have made a CAPScall on my profile, and I think any price below $50 would be an excellent opportunity to snatch up more shares.

Apple(Nasdaq: AAPL)Some people might wonder why this wasn't one of the core stocks I suggested. Here's why: Apple's primary advantage is obtained by making products that are so revolutionary we didn't even know we needed them until they came to market. Steve Jobs played a big role in that, and without him, I think it's prudent to approach with caution.

That said, the opportunities for Apple are immense if the company continues to fire on all cylinders. With iPhone sales exploding, a new iPad on the horizon, and international sales booming, there's no reason not to own shares of Apple. I believe Apple is pretty cheap right now. I've backed up that belief with my own money, and on my profile.

IPG Photonics(Nasdaq: IPGP)If ever there were a disruptive innovator, IPG is it. The company was the first mover in the fiber-optic laser industry. Because it uses fiber optics instead of carbon, IPG produces lasers that are far more powerful at a lower cost.

The company is also vertically integrated -- producing its own diodes. That's good news when times are good, but can be a liability when IPG's industrial clients go through a market downturn. Basically, this scare (over a cyclical softening of demand) explains its recent price spill since the summer. As with all of the other companies I've mentioned, I've backed up this pick with my own money, and on my profile, and I think shares are priced for purchasing now.

A name for this type of investingTruth be told, the "growth" moniker may not be the most accurate for this type of investing. By focusing on innovation, I'm really zeroing in on what Fool Founder David Gardner calls Rule Breakers.

David runs a highly successful newsletter based on Rule Breakers, and his team has recently assembled a special free report: "Discover the Next Rule-Breaking Multibagger." Inside the report, you'll find out about a company that's poised the benefit from our aging population. Get the report today, absolutely free!